Manufacturing Growth Induces Economic Recovery in the Inland Empire

By: Sharjeel Sohaib

• 

Nov 18, 2021

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Purchasing Managers’ Index (PMI)

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This month’s Inland Empire Purchasing Managers’ Index (PMI) was 62.3, showing an increase from last month’s 54.7“, according to a new report by the Institute of Applied Research at Cal State University, San Bernardino (CSUSB).

The index shows an upward trend in the Inland Empire’s business activity, especially during the last 14 months. “

“This month’s Inland Empire Purchasing Managers’ Index (PMI) registered 62.3, a sharp increase from last month’s 54.7. The index has remained above the baseline 50% mark for fourteen consecutive months, indicating that the Inland Empire manufacturing sector and overall economy have continued the trend of steady growth for over a year.”

Dr. Barbara Sirotnik (Director, Institute of Applied Research) and Lori Aldana (Project Specialist, Institute of Applied Research)
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PC: Institute of Applied Research, CSUSB

PMI shouldn’t be considered the only indicator to rely on when assessing the overall economic health of a region

We have covered this in our Weekly Wire Roundup

What is PMI, and Why is it Important?

The PMI is an economic indicator based on monthly surveys of private-sector companies in the manufacturing and services sectors.

Four hundred purchasing executives in the manufacturing sector, representing 20 industries, corresponding to their contribution to the Gross Domestic Product (GDP) in all 50 states, are surveyed monthly.

Five areas monitored through this survey are production, new orders, supplier deliveries, inventory, employment, prices, exports, and imports. A PMI index over 50 represents growth or expansion in the manufacturing sector.

In a nutshell, PMI shows “whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting.”

Though it shouldn’t be considered the only indicator to rely on when assessing a region’s overall economic health and direction, it is a good start.

Labor issues, Inflation, supply change disruptions

The coming months might see deviations from this upward economic trend as labor issues, inflation, and supply chain disruptions may impact business activity.

Business is fantastic. It started slowly in the first few months, but ever since November, we’ve had a tear, and business has been increasing month by month,” noted a business owner cited in the report.

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Source: Institute of Applied Research, CSUSB

Other Indicators

Economic indicators, such as the Supplier Deliveries Index, Commodity Prices Index, and Employment Index, show that economic recovery is not without two accompanying issues. One is the high inflation rate, and the other is the continued supply chain bottlenecks.

Update September 2022:

The PMI index has dropped first time below 50 in the last two years. The report below talks about that in detail.


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